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Hong Kong Startup to offer physical Bitcoin, Futures Ethereum (with leverage!)
For a recent piece of Bloomberg, the "contest" for physically delivered Bitcoin futures is heating up, while another contender has entered the fray. This new competitor is a nascent Hong Kong-based encrypted startup called CoinFLEX, formerly a branch of the Coinfloor of U.K. This young enterprise, according to reports, is supported by "(ex) Bitcoin Jesus" Roger Ver and Trading Technologies International, which is a company that programs and manages trading software.
Mark Lamb, a cryptic enthusiast of six years, will direct the exchange as CEO. Lamb presumably made the decision to delve into leverage, as CoinFLEX is likely looking to offer physical futures contracts for Bitcoin, Bitcoin Cash and Ethereum with up to twenty times more leverage. These contracts will presumably be linked to Tether (USDT), a controversial but necessary move for the exclusive CoinFLEX settlement system.
For those who do not know, in the derivatives world, physical (physically supported) means that when contracts have expired, their owners will be awarded the stipulated good, rather than the cash equivalent. Lamb expressed the importance of physical derivatives in a recent interview with Bloomberg:
Cryptographic derivatives could become an order of magnitude bigger than the spot markets and the main thing that would stop growth is the lack of physical delivery … Volumes are reduced due to a problem of trust when it comes to operations settled in cash.
Lamb explained that, in the best of cases, the term crypts market could be twenty times larger than its compatriot spot, which means that in the end, tens of billions could be exchanged via encrypted derivatives.
Is CoinFLEX a Bakkt competitor, BitMEX?
Judging by this, many argue that this little-known startup is ready to face large dogs in the cryptosphere. For example, some may argue that this platform could be a "Bakkt killer", as CoinFLEX intends to offer physically delivered futures with lever, which will probably attract ambitious speculators from all over the world.
Bakkt, for those who have missed the note, is the first American cryptocurrency platform by a noteworthy institution (parent NYSE, Intercontinental Exchange) that intends to launch physically supported BTC futures, which will put its offer apart vehicles on the CME and on the CBOE. Many have claimed that Bakkt will uniquely catalyze the next crypto rally, but with the arrival of CoinFLEX, it may be a two-handed effort.
However, considering that Bakkt has worked with Microsoft, Starbucks, Boston Consulting Group and notable groups inside and outside the cryptosphere, some may argue that the ICE initiative remains far ahead of CoinFLEX.
However, some still believe that this newcomer is ready to face the hegemony that BitMEX, another notable Hong Kong-based cryptographic platform registered in the Seychelles, has established itself. Many know BitMEX and its respected, sometimes controversial founder, Arthur Hayes, for offering a 100x leverage on the XBT / USD pair.
This feature alone pushed the exchange, estimated at over $ 1 billion in the 2018 fiscal year, at the top of the cryptosphere, often trading one million BTCs (notional) during volatile sessions. And while the XBT / USD pair works well for speculators, especially for those who want to turn the fastest dollar into a crypto, the platform uses BTC card and a complicated margin system to facilitate leverage.
So, many believe that the introduction of physically delivered high-lever futures could be an interesting option for those who hesitate to use BitMEX. Yet, even if CoinFLEX achieves a considerable amount of traction, BitMEX, which has a noble office in the most expensive part of the Hong Kong real estate sector, would probably fit in order to overcome its competitor.
Title Image Courtesy of Andre Francois Mckenzie Via Unsplash
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